China web giant Tencent invests $736 million in 58.com

By Thad RueterSenior Editor

58.com is a China-based classified site similar to Craigslist.

58.com Inc., a China-based classified site similar to Craigslist, has won a US$736 million investment from Tencent Holdings Ltd., the operator of major social and messaging platforms in China. Tencent receives a 19.9% equity interest in 58.com.

“Tencent and 58.com have agreed to use each other as the preferred partner in local services,” the companies say in a statement. “Both companies will jointly build out next generation online-to-offline services leveraging the combined strengths of their respective platforms.” Online-to-online refers to marketing tactics designed to drive web shoppers into physical stores.

58.com anticipates “capturing traffic from Tencent's various online properties such as QQ, Weixin, QQ.com, and QQ browser,” the statement says. “Integrating 58.com's services into these properties will further expand 58.com's user base, improve the user experience by allowing users to access social tools to find recommended merchants, and help users improve the level of communication between each other and with merchants.” QQ is an instant-messenger service; Weixin, also known as Wechat, is a messaging service used by more than 300 million consumers, Tencent says.

58.com went public in the United States in late 2013. Earlier this year, Tencent sold two e-retail sites, wanggou.com and PaiPai.com, and a minority stake in Tencent’s major e-retail site, Yixun.com, to JD.com Inc., the largest Chinese direct-to-consumer e-retailer. As part of the deal, Tencent paid nearly $215 million for a 15% stake in JD.com, positioning the two companies to challenge China’s leading e-commerce company, Alibaba Group Holding Ltd. Alibaba, which plans to go public on the New York Stock Exchange this year, operates two large online marketplaces that account for about 80% of online retail purchases in China.